Happy New Year! Are you one of the people who make New Year Resolutions? Considering your goals in 2023, is owning a home one of those goals? Could your goal be to renovate your current home? Or to own a second home as an investment property? If these are things you’re considering in 2023, the best thing to do is reach out to one of our mortgage specialists to evaluate your current situation. Here are some ways we can help you with your goals.
My Goal is to Own a Home this Year.
If your goal is to own your first home this year, there are a few things you should consider in preparation for buying a home.
Are you ready to provide a down payment? When you make an offer to purchase a home, you will be required to pay an initial deposit to verify you are a serious buyer and to make the contract legally valid. This deposit will be held in trust for you and will ultimately form part of your total down payment. The minimum required down payment for the purchase of an owner-occupied property is 5% of the purchase price. Your down payment can come from your own savings or RSP or can be gifted to you by a family member. There are programs readily available like the Government of Canada’s Home Buyers Plan that can help you withdraw funds from your RRSP.
Do you have additional savings? Lenders will want to see that you have additional funds at your disposal to cover additional costs such as legal, appraisal, moving, utility deposits, etc. A safe estimate in Alberta is 1.5% of the purchase price of the home.
How is your credit? Credit is definitely a consideration when applying for a mortgage. Ensuring that your debts are as low as possible and your credit score is high enough is a huge step in increasing your chances of getting approved.
Have you spoken with one of our mortgage specialists? We can help assess your current situation and provide insights on how to get a mortgage pre-approval. A mortgage pre-approval is a great tool for ensuring you have the funds to buy a home. It shows home sellers that you are serious about buying a home.
My Goal is to Renovate my Home or Reduce my Debts.
Are you planning some renovations to your current home? Are there monthly payments that are holding you back from your financial goals? Refinancing your mortgage may be a great option for you in 2023. When you refinance your mortgage, you can negotiate your interest rate, and amortization period and gain access to up to 80% of your home’s current equity. This equity can be used to complete renovations on your home, to pay down high-interest debts, or can be used as you see fit. If your current mortgage payments are a concern for you, a refinance can allow you to extend your amortization period, resulting in a lower monthly payment in many cases. Either way, you’re able to potentially use a refinanced mortgage toward your financial goals.
There are some things to consider when refinancing your mortgage. A few of those things are:
- How close you are to the end of your mortgage term. (This can change how much in penalty you would have to pay to start a new mortgage term.)
- Your current credit score can affect your qualification for refinancing your mortgage.
- Your current home’s equity
- Financial Stability
If you have any questions about refinancing your mortgage, come speak to us today and we can book you for a consultation.
My Goal is to Own an Investment Property.
Buying another property comes with some different down payment requirements. If you are purchasing an investment property, you will be required to pay a 20% down payment. If you are purchasing a new owner-occupied home & converting your current home into an investment property, the minimum required down payment is 5%.
Lenders typically request an appraisal on investment properties they are financing. The value & condition of the property is very important to the lender as mortgages for investment properties cannot be insured through CMHC, Sagen, or Canada Guaranty. You’ll also want to consider the costs of ongoing maintenance and repairs on any rental property.
It’s important to know exactly what you’re getting into when it comes to investment properties. Our mortgage specialists are experienced with all things “investment property” and are here to walk you through the process. You can check also out our article on investment properties by clicking here.
We want to help you achieve your 2023 goals. We encourage you to speak with one of our mortgage professionals to see exactly where you can save money, grow your portfolio or buy your first home. You can set up a no-charge consultation meeting by visiting us at https://mortgagebrokeralberta.ca/mortgage-questions/.